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Shades Of Gray

As noted in other recent posts (here and here), while FCPA enforcement is largely devoid of judicial scrutiny, sentencing of individual FCPA defendants remains a judicial function and provides an opportunity for someone other than the DOJ to have input on some aspect of the DOJ’s positions when it comes to FCPA enforcement. This is what makes FCPA sentencing transcripts such interesting reads. The lawyer comments, and more importantly those of the judge, are unscripted and often telling. I wish I had all FCPA sentencing transcripts to share and perhaps you can assist in that endeavor by sending a transcript my way at fcpaprofessor@gmail.com.

One FCPA sentencing transcript I recently received was the August 2010 transcript from Gerald and Patricia Green’s sentencing hearing.

In terms of background, as noted in this previous post, in September 2009, the Greens were found guilty by a federal jury of conspiracy to violate the FCPA, substantive FCPA violations, and other charges. See here for the DOJ New Release. As noted in the release, evidence introduced at trial showed that “beginning in 2002 and continuing into 2007, the Greens conspired with others to bribe the former governor [Siriwan] of the Tourism Authority of Thailand (TAT) in order to get lucrative film festival contracts as well as other TAT contracts.”

As noted in this previous post, in August 2010 District Court Judge George Wu (Central District of California) rejected the DOJ’s 10 year sentencing recommendation and sentenced both Gerald and Patricia to six months in prison.

The sentencing transcript (here) indicates that Judge Wu believed that the Greens helped make the TAT a success, performed the services it was engaged to perform in a professional manner, and increased revenue for the country.

Wu stated as follows.

“Insofar as the nature of the crimes are concerned, the jury found that the defendants bribed the head official of the TAT in order to obtain contracts to operate the Bangkok International Film Festival between 2002 and 2006. The Court finds that by engaging in that scheme the defendants were not trying to get money from the Thai government without performing the services or even to engage in those services in a slipshod manner. Prior to the Greens’ involvement, the Bangkok International Film Festival was not a particularly successful endeavor in any sense of the word. Through the Greens’ management the Bangkok International Film Festival gained in stature, reputation and increased revenue for the country. The defendants are claiming that the nation of Thailand profited in the sum of 140 million. I find that that figure is somewhat excessive. Although, I do feel that the evidence does show that there was a profit when everything was said and done, including any payments that were made either to the Greens or to Ms. Siriwan. Therefore, the Court would find that the Greens’ efforts and also actually their scheme did not actually cause any monetary loss for the country.”

Elsewhere in the sentencing transcript, Judge Wu and DOJ attorney Jonathan Lopez had the following exchange as to whether the contracts at issue benefited Thailand.

“MR. LOPEZ: […] It’s hard to argue that providing film festivals [provides a substantial benefit to the country].

THE COURT: It depends on the amount of money that’s involved and that’s generated. If it was successful, which it was, that does in turn engender jobs of one sort or another to the tourist industry having films being made in the country and things of that sort.

MR. LOPEZ: Well, their sentencing papers have not established any sort of direct link of that nature, if that argument was even relevant.

THE COURT: I think they proffered the evidence of it. The government may not find that evidence to be substantial, but the defense did proffer it.”

The transcript also indicates that Judge Wu (1) was not persuaded by the DOJ’s position that the reputational harm to Thailand was a proper issue to consider at sentencing; and (2) was troubled by the DOJ’s presumption that the Greens corrupted the Thai official when the opposite could equally be true – that the Thai Official corrupted the Greens.

The following exchange between Judge Wu and DOJ attorneys Jonathan Lopez and Bruce Searby is interesting.

“MR. LOPEZ: One thing that the Court I don’t think is taking — or that I’d like to ask the Court to take into fuller consideration is, setting aside the economic harm, the reputational harm corruption has, that is the reputational harm that comes to a city domestically or internationally or a state internationally where corruption exists. There is a reputational harm to the system, to the people, to the integrity of the government when corruption is not punished swiftly. That is one of the reasons why the FCPA has been enacted is to promote the ending of corruption. Corruption in and of itself is a crime, and these two defendants engaged in pure corruption with the governor in this scheme. Your Honor looks as though he may be confused by something I’m saying.

THE COURT: No. I’m not confused by what you are saying. It’s just that when you were making that argument, I presume you were referring to the United States.

MR. LOPEZ: Well, I’m referring both to the United States and to Thailand. You had mentioned Thailand is not a monetary victim. These defendants victimized Thailand reputationally as well, and I don’t want that point to be lost. I can expand further.

THE COURT: Obviously, when one has a bribe, one has to have the person receiving the bribe. I suppose that that is some sort of reputational harm. But conversely, however, this Court can only decide the issue of punishment as to the defendants it has here insofar as Ms. Siriwan is concerned, and the issue as to whether or not Ms. Siriwan has somehow sullied the reputation of Thailand is something that this Court can’t deal with.

MR. LOPEZ: The government posits that the defendants assisted in the sullying of the reputation of the Thai government system by assisting in corrupting that system through their actions. No other American company was able to bid on these projects. No other Thai company was able to bid on these projects because the defendants had a lock on it, and the statement that contracts should be awarded based on merit and not pay, the jury found that those two defendants paid for all of those contracts. That’s a corruption of the system.

THE COURT: And I understand that they have to suffer the consequences of that, but vis-a-vis the reputation of Thailand, again, the fact that I punish these defendants in one way or another is not going to affect the reputation of Thailand. It’s up to the Thai government to take steps vis-a-vis its own officials as to whether or not it feels that those officials deserve some sort of punishment one way or another.

MR. LOPEZ: I believe you can, Your Honor.

THE COURT: I can only do the punishment insofar as these defendants are concerned. I can’t affect Thailand’s reputation one way or another by my sentencing.

MR. LOPEZ: I believe you can, Your Honor. I believe it sends a message, both domestically and both internationally, that the United States citizens are not going to promote corruption in other countries and add to that. That’s the United States’ side of it.

THE COURT: But, unfortunately, for those persons in Thailand, there might be other countries with other persons who may attempt to do corruption in a similar fashion. They are not governed by United States law. So, therefore, unless the Thai government takes steps in that regard, I don’t understand how the Thai — Country of Thailand’s reputation vis-a-vis corruption or not corruption is affected.

MR. LOPEZ: The fact remains that these two defendants corrupted the Thai system, and they are before this Court.

THE COURT: Or vice versa. It might very well be that Siriwan posed the endeavor to the Greens. There is no evidence one way or the other on that. […] In which case we would have a situation where the Thai high governmental official corrupted two persons whom do not have any criminal convictions prior to this point in time, whose reputation at least amongst the persons who have provided letters to this country was unsullied, and it was that Thai official who corrupted the otherwise incorruptible citizens of this country.

MR. LOPEZ: First of all, Your Honor, I think you are basing your —

THE COURT: I’m using your argument in the same way. Since there is no evidence as to who corrupted who, your presumption is that the defendants corrupted the Thai official. It might have very well been that the Thai official corrupted them.

MR. LOPEZ: Your Honor, I think the Court is confused as to what my argument is. It does not center around whose idea it was. It does not center around that. It centers around the corruption that took place period. From 2002 to 2007 these defendants engaged in a conspiracy, no matter whose idea it was initially, to corrupt the Thai system as well as to sully the reputation of the United States and its businesses that operate out of the United States. I submit to the Court that that is a harm. That is a harm to both Thailand and to both the United States and that these —

THE COURT: I would agree that obviously when bribery becomes a issue there is a reputational harm.

MR. LOPEZ: Yes.

THE COURT: But again, to make a strong point vis-a-vis the sentencing, before I would have any sort of position as to what effect that would have on how I sentence, I would have to know such things as who corrupted who. Otherwise, what difference does it make.

[…]

THE COURT: What I did is to utilize that argument vis-a-vis [Lopez’s] contention that in this particular situation the defendants are somehow to blame because of the bribery situation without placing any equal blame on the part of Ms. Siriwan who was involved as well.

MR. SEARBY: Your Honor, I would happily place equal blame on Governor Siriwan for what has happened, no doubt about it.

THE COURT: All right.

MR. SEARBY: However, the defendants here dived into bribery with both feet because they initially started bribing the governor in one contract.

THE COURT: I understand your position.

MR. SEARBY: Basically, they ran wild in these various other contracts.

THE COURT: I understand your position.

MR. SEARBY: There is no doubt they were willing participants and enthusiastic participants in bribery. In fact, as the evidence came out at trial, they had practically no other revenue other than TAT contracts that they obtained through bribery.

MR. LOPEZ: Your Honor, I want to make sure this point is clear. Of course, the governor has an equal share of blame in this regard, but the governor is not before you. These two defendants are before you. That’s one of the reasons why I’m a little confused as to the government’s emphasis on what’s happening in Thailand. The government submits that this Court’s opinion should not be governed by what Thailand does with its own citizens. That should not be a relevant factor. It’s not the situation where if Thailand doesn’t punish their person we shouldn’t punish our people. Two wrongs don’t make a right. It’s the same type of argument that people have said about foreign bribery; well, that’s what you have to do in that country, so obviously it’s okay. Well, no, that’s not what you have to do in that country. Punishment should not be withheld from one defendant because another defendant is still going through the process. We don’t know what’s going to happen with that other defendant. [See here for a recent post concerning the DOJ’s enforcement action against Siriwan]. There is a process in place. Because we are further along does not mean that, that process is not happening. These are the defendants before you. These defendants have that blame.

THE COURT: I understand. What else from the government?”

*****

Bribery is seldom a black and white issue. There are many shades of gray. However this color often appears only during sentencing of FCPA individual defendants when someone other than the DOJ is defining the colors.